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The M&A rumor mill hyping a buyout of Lexmark International Group (NYSE: LXK) by Xerox Corp. (NYSE: XRX) has been silenced. On Friday, when Xerox reported a 53% drop in third-quarter earnings, company CEO Anne Mulcahy commented on a suggestion that her firm might be looking to buy rival printing concern LXK. She quickly put these allegations to rest, noting: "I don't think Lexmark is an ideal candidate . . . there is nothing [it] would bring to the table that would be really value-creating for us."
But Mulcahy certainly is not acquisition-averse; she has overseen Xerox's purchase of four companies in the past 15 months. She noted that Xerox hasn't ruled out deals with smaller companies that would help bulk up her company's software offerings.
In other news on the Xerox front this morning, Citibank upgraded its rating on the shares to "hold" from "sell," keeping its $17 price target unchanged. Covering analyst Matthew Troy said in a client note that, "While we think it is too early to become more constructive with the stock, we do note that Xerox could be attractive in a broader-market pullback, to the extent it offers investors exposure to technology."
Xerox shares have gained over 2% so far today despite the pullback in the broader market.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
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